Getting Started

Preparing to Buy a Home

Buying a home is one of the biggest financial decisions you’ll make — and being well-prepared is the best way to ensure success. Taking the right steps early can make the process smoother, improve your mortgage options, and give you a competitive edge when the perfect property comes along.

Start a “Green File”

Before speaking with a lender or mortgage broker, it’s helpful to organize your financial information into one place — often called a “Green File.” This file should include:

• Recent pay stubs and a letter of employment (confirming your position and income).
• T4 slips and income tax returns for the past two years.
• Bank statements and investment account summaries.
• Details of any loans, lines of credit, or credit cards.
• A list of monthly financial obligations and recurring expenses.

Having this documentation ready shows lenders you’re organized, serious, and financially prepared — and it helps speed up the mortgage pre-approval process.

Check Your Credit Rating

Your credit score is one of the most important factors lenders consider when approving a mortgage. In Canada, scores range from 300 to 900:

• 680 and above – Excellent: often qualifies for preferred rates.
• 600–679 – Average: may still qualify for standard rates and terms.
• Below 600 – Needs improvement: but can be raised with proper planning.

You can obtain your credit report directly from Canada’s two major credit bureaus:

• Equifax Canada: www.consumer.equifax.ca | 1-800-465-7166
• TransUnion Canada: www.transunion.ca | 1-800-663-9980

If your score isn’t where you’d like it to be, a knowledgeable mortgage professional can help you improve it before applying. Moving forward, treat your credit like gold — pay bills on time, avoid high balances, and limit new credit inquiries.

Savings & Debt Management

When preparing to buy, begin setting aside funds for:

• Your down payment — while some mortgages can be obtained with less, a 20% down payment is typical and allows you to avoid CMHC mortgage insurance.
• Closing costs — including legal fees, appraisal, land transfer tax, title registration, and other related expenses (typically 1.5% to 4% of the purchase price).
• Home inspections, moving costs, and utilities for your new home.

At the same time, work on reducing high-interest or revolving debt such as credit cards or unsecured loans. Paying down these balances improves your debt ratios and increases the amount you can qualify to borrow.

Maintain Financial Stability

In the months leading up to your purchase, lenders want to see consistency. Avoid changing jobs, moving large sums of money between accounts, or making significant purchases (like a new car or furniture) before your mortgage is approved. Before making any major financial decisions, speak with your mortgage advisor. Even a small new loan can affect your borrowing power — for example, a $500 monthly payment could reduce your eligible mortgage amount by approximately $80,000–$85,000. Consistency and financial clarity help you present the strongest possible profile to lenders.

Setting Yourself Up for Success

With the right preparation, buying a home doesn’t have to be overwhelming. By organizing your finances, managing your credit, and maintaining financial stability, you’ll be ready to act quickly and confidently when the right opportunity appears. If you’d like introductions to trusted mortgage brokers, legal professionals, or financial advisors in the Greater Toronto Area, contact Michael — his network of experienced experts will ensure you have the right team behind you from day one.